Restructuring Career Paths
Hi,
I have been reading WallStreetOasis for the last 2 years and now that I have my first graduate job I think now is the time when I need some career advice from you guys..
I am a Management postgrad from a top school in London and recently landed a Research Associate role at a boutique Restructuring practice. The job involves developing industry leads and assissting the partners witht their research tasks but I am now wondering whether I did the right thing taking up this job.
I took this up because the nature of restructuring is similar to M&A advisory in IBD. What I would like to know is how and what I can do to get into IBD from where I am. My firm might be willing to help me obtain an accounting qual, would this be useful in my quest for IBD Analyst roles.
Any insight is appreciated!
Thanks
bump
dont mean to jack your thread but is restructuring the same thing as lev fin? if not whats the difference?
Having done some restructuring work in IB long time ago, I can tell you that it requires a certain kind of personality to enjoy it.
In other transactions like IPOs, follow on offerings, mergers/acquisitions, etc. -- you're dealing with clients who are looking to expand their businesses - raising capital, buying/selling companies, etc. A deal that "closes" is one with a positive outcome where people are happy -- it's additive. Think of it like helping someone get married.
Restructuring is usually the opposite. Think of it like helping someone get a divorce. They're hiring you because it's a fcked up situation, and they want you to make it less fcked up. A deal "closes" when you get all parties to compromise - so that everyone is unhappy to some extent.
In restructuring, you're dealing with clients (either the creditors or debtors) who are at their wits' end. They are on their last legs. Negotiations can get very emotional and personal. Irrationality and spite come into play much more than in other kinds of transactions.
Creditors can feel embarrassed for looking foolish (by not being as careful lending money). Debtors can feel like they're being screwed by draconian loan covenants. Add into the fact that the actual people in the negotiations have their jobs at stake, it can get very heated at times, with people threatening one another personally (I've seen it first hand). Or, you're dealing with a company that is so f*cked up you've been hired to salvage whatever is left or "solve" a problem that isn't really solve-able --and having to deal with the execs on that sinking ship who are freaked, or indifferent.
The work itself is also incredibly detail oriented - more so than just about any transaction. You have to, because you have to nitpick every thing to find every dollar and cent available (or if you're repping the borrower/debtor, hiding every dollar and cent). It's detail oriented on the numbers side, and the legal side (poring every single loan covenant and clause) and can become extremely technical.
The transactions also tend to take a little longer -- sometimes years if the transaction is complex and large.
To last longer-term, you need to be the kind of person who can handle being around miserable and aggravated people because of the nature of the situation (one person owes another person a lot of money and can't pay it back, jobs are at stake, macho pride can come into play, etc).
Again, you will get situations where you're dealing with level headed people on all sides, which will be a gift because it then just becomes about coming up with a "rational" compromise on all sides -- but in many cases that will not the case (or it can start off where everyone's level headed, until the process drags on and on, people get pissy, and then they get personal, and then it becomes very hard to get anyone to agree when at least one side is being irrational) - and can become a battle of wills.
One other thing.
If you get staffed on cross-border restructuring work (usually US/Euro creditors and Latin American/African/Asian borrowers/debtors), there's also additional element to consider.
Example: on one restructuring transaction in Thailand, one of the KPMG accountants on the deal disappeared. This was a sizeable restructuring engagement for a large Thai conglom that had links with the gov't, and owed a LOT of money to US/Euro creditors. He found something he shouldn't have. This happened while I was working on a restructuring deal in Asia.
Example 2: a Russian lawyer working on behalf of a US businessman who was trying to restructure his Russian assets discovered rampant Russian gov't corruption and graft. This Russian lawyer got locked up, and died in prison (I believe there was an interview of the American creditor on CNN's Fareed Zakaria).
You may get staffed on restructuring deals in Latin America, where you're often repping the creditors -- the debtors either being large connected congloms linked to gov't or something else. Doing due diligence in Colombia on this kind of assignment may make you worry just a little.
Again, remember that you can be dealing with people who are in a "fight or flight" situation. Clients don't hire advisory firms/IBs to help them restructure $300,000 in debt, but more like $100M to billions, where people's livelihoods and reputations can be at stake. If you're working on transactions with counterparties that are based in countries which don't have a strong legal system, it only adds one more occupational hazard.
Not every deal will be like this, but there's a somewhat decent chance you'll run into at least some of this if you work at a place with good deal flow.
thats a great post MBAApply, thanks very much for the insight!
That's a great post Alex! I wonder whether I am the 'restructuring type', but I would certainly like to get into IBD in a BB someday. Do you think I can work toward that with my present job and would an accounting qual be of any use at all?
Thanks once again!
For restructuring, having an accounting or legal background would be a greater asset than it would be for regular IBD because of the nature of the transactions.
Again, in restructuring you're working with accountants and lawyers, poring through hundreds to thousands of journal entries and general ledgers and legal docs. Some people find that fun. Others don't.
What's the best Restructuring career path? Banking or Consulting? (Originally Posted: 05/16/2012)
If one is interested in restructuring, which route offers the better career path in terms of experience, pay and how do the exit ops differ?
Banking Path - I know working at Blackstone, Lazard, or HLHZ would be great experiences, but what about lower tier banks like a Duff & Phelps...
Consulting Path - Working at firms like Alvarez & Marsal, AlixPartners, or FTI Consulting.
Does the financial restructuring (banking) and the operational restructuring (consulting) distinction explain it all?
All things considered, what's the better career move?
Thanks for your help.
Very interested in this as well. I always head about the banking path but never about the "consulting path". It seems it could be at least as challenging and interesting, for the pay I don't know.
Also, am I right in saying that only the Restructuring Consultants would be the ones playing the interim CEO or Chief Restructuring Officer type roles?
Thanks.
Yes. When a company enters bankruptcy it hires 3 advisers: a financial adviser (restructuring consulting), a legal adviser (bankruptcy law firm), and a restructuring I-bank.
Restructuring Consultants decide the plan for operations going forward such as divesting segments, cutting costs, slowing revenue decline.
The restructuring I-bank is in charge of valuing and SELLING the assets.
The Legal adviser guides the company through bankruptcy litigation.
There is cross-over between the separate advisers and their duties range wider than stated above, but that is the general idea. To get specifics I would read literature on the subject.
anyone?
banking. you'll make more money, have better exit opps. Some of the mid markets have decent restructuring groups that you can get good experience with.
Thanks New Yorker. Any other thoughts?
Is banking the clear way to go? If I am more passionate for the Turnaround and Operational Improvement aspects of Restructuring, does that mean I need to go the 'Consulting' path? Or will I get any 'Turnaround' experience on the banking side?
Thanks.
The more hands on experience is consulting, So I am assuming if you want to have an actual impact on these companies then that may be the better path for you. As a junior level investment banker it's more of execution, I.E modeling, putting together pitches..You don't really give a shit about the company its all about deal flow.
Is it possible/common to switch from banking restructuring to consulting restructuring or vice versa ?
You definitely get more operational experience on the consulting side but it doesn't mean you cant get the valuation and financial skills as well they are needed, you just jave to position yourself to be in that part of the engagements. Though the really completed financial deal execution will be done by the bankers. All in all I just think it really has a lot of crossover but it depends on how much in the weeds you want to be. And the consulting part is where you'll get that in the weeds experience.
I read threads where it has happened, I am not sure how common.
Anyone else have any inputs on Restructuring careers.. Thanks for your help.
Ok thanks ripken818. I would love to know more about restructuring as well. I can give SB to insightful posts !
Interested
How difficult is it to break into operational restructuring (consulting)?
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